In today's unpredictable economic landscape in Canada, people are searching for ways to save money. These uncertain times can often cause increased financial stress. Whether it’s due to a global pandemic or a personal financial crunch, the need to save money becomes substantially more critical when facing things outside of your control.
While it may seem daunting, it’s not entirely impossible to maintain, and even increase, your financial safety net with some financial planning.
The first step to creating some financial stability for your future is by creating a sound strategy. If you've been asking yourself, "How can I save money when there are variations in my income, prices are escalating, and job security is fragile?" follow these helpful tips to get started.
- Make a Plan and Budget
Saving money involves more than simply cutting down on spending; it involves creating a comprehensive financial strategy that can weather any storm. The key to creating this kind of strategy is understanding how to budget effectively. Budgeting keeps you on track and prevents any overspending.
Before you start budgeting for the future, look back and set a plan. This involves tracking all your income and expenses, no matter how small they might seem. Take a look at where your money is currently going; write down all of your fixed expenses such as your mortgage, transportation payments, utilities, and telephone bills. Then, separate out your variable expenses such as groceries, clothing and entertainment. By monitoring where your money goes, you can find opportunities to make necessary adjustments for any future needs. If you need assistance, try searching for online tools that can help you track your budget. Google sheets can be a great tool to create working spreadsheets to track expenses and plan for each of your goals. There are also free online tools and apps that can give you a little guidance.
- Set Short and Long Term Goals
Your next step is to set your financial goals. These might range from paying off debt, saving for a house, building a retirement fund, or establishing an emergency fund. The more specific your goals, the more likely you’ll be to achieve them. It can be helpful to set your goals into short-term (less than a year), mid-term (one to five years), and long-term (more than five years) to give a clearer picture of what your savings allocations should look like.
The key to reaching these goals, and saving for the future, is to evaluate your non-essential expenses. Any memberships, dining or extra spending that can be trimmed back can then potentially be allocated to one of your savings goals. Understand that it isn’t money you’re parting with forever, it’s money that will benefit future-you. That “you” will thank you! Talk to your financial institution as well, as some allow you to create separate accounts for each of your planning goals at no additional charge for easy allocation or direct deposit each month.
- Cut Down on Luxuries
One of the most practical ways to gain financial control during uncertain times is by reducing expenses, particularly on luxuries. For instance, eating out at restaurants frequently, maintaining many paid streaming service subscriptions or apps, or shopping for clothing and accessories that are trendy or expensive, are common examples of luxuries. When these expenses exceed what’s affordable within your income, it creates financial stress and prevents the ability to save.
Prioritize expenses that are necessary for day-to-day living and separate them from those that are meant for personal extravagance. For instance, a smartphone might be considered a luxury but it’s typically essential for communication and working. Invest in a device and skip the annual upgrades or bells and whistles where possible. If you do use your device for your job, see if your employer will consider paying for a percentage of your monthly bill (especially if your position requires you to be on your phone frequently, or on call).
Consider making lifestyle changes as well. Adopting minimalist and frugal habits helps to focus on things that are truly necessary. For example, focusing on DIY approaches to small things around the home can help you spend less on luxury services. For instance, cooking at home instead of frequently dining out, or gardening and home maintenance instead of hiring landscapers or snow removal, could save considerable amounts.
You can also consider alternatives to some popular luxuries, such as replacing a gym membership with home workouts, or limiting dining out by experimenting with gourmet cooking at home and meal planning. These offer cost-effective ways to experience the same benefits without the heavy price tags.
- Shop Smart
Changing the way you shop is a key way that you can free up some of your flexible income for your savings goals. Resist the urge to buy impulsive items and change your approach to shopping on an overall basis; shop during sales events.
Consider buying second-hand or consignment clothing and household items. Not only will this help cut down on your overall expenses towards these items, but they’re more sustainable and environmentally-friendly buying practices.
When shopping for groceries and necessities, compare prices across different vendors before making a purchase. Online marketplaces are also valuable tools for price comparison and procuring low-cost items.
Many stores offer discount coupons. Look into online coupon sites such as Smart Canucks, that can help you both online and offline with your purchases (or go directly to suppliers’ sites). Additionally, many credit and debit cards provide cash-back offers on specific categories of expenses. Using these cards wisely can aid in savings.
Saving on things like groceries, may mean buying in bulk. This strategy can result in significant savings. Items that have a longer shelf-life, like canned goods, toiletries, and dry goods, are ideal for bulk buying. Some stores offer discounts for bulk purchases, further increasing the potential for savings.
Finally, compare providers for services such as your phone provider and utilities. Shop for the best rates or negotiate with your current provider if you’re a loyal client. Place your lights and thermostats on timers to make sure they’re turned down in the evening.
- Boost Your Income
While saving money is essential, opportunities to increase income should not be overlooked. It's harder to save money if your income remains static, particularly during times of inflation. Can you freelance, consult, or build a part-time business? Having multiple income streams is a robust safety measure during unstable economic times. Side hustles are an excellent way to add to your income. They offer flexibility in that you can do what interests you while making extra money. Some side options are freelance writing, virtual tutoring, crafting and selling handmade products, pet sitting, or driving for ride-share or delivery apps.
Selling unused or unwanted things around your home can also help boost your income. Online platforms have made it easy to sell second-hand items to an extensive market, such as Kijiji and Facebook Marketplace.
If you’re considering a side-hustle or you’re already an entrepreneur, consider the value of private insurance.
Ultimately, the best ways to save money during uncertain times come down to personal commitment and planning skills. As they say, "Rome wasn't built in a day." Neither will your savings account. Saving during uncertainty involves a multi-faceted approach including a combination of cutting non-essential expenses, planning and budgeting, maintaining goals, managing debts, cutting down on luxuries, shopping smart and boosting income. Just remember, every drop makes a mighty ocean.